A train wreck has occurred on the way to health coverage for all in the U.S. Forty percent of households that received subsidies for their coverage in 2015 haven’t properly filed 2014 tax returns yet and, in theory, won’t be able to apply for a subsidy in 2016 as a result.

That’s what the Treasury Department determined after comparing tax filers with those who’d received subsidies. A report from the Associated Press/Washington Times said the Treasury identified the problem when reviewing tax records of the 4.5 million households that got subsidies. Of the 1.8 million who are at risk of losing subsidies:

760,000 filed their tax forms but didn’t include Form 8962, the subsidy tracking form;
710,000 simply didn’t file a tax return;
360,000 requested an extension.

The Internal Revenue Service, in an attempt to address the issue, wrote to those who hadn’t yet filed by July, suggesting they do so within 30 days in order to preserve their subsidies.

There’s also been a lag in coordinating tax filings between the Treasury and other departments involved in health care reform tracking due to the addition of Form 8962.

The administration is giving folks who say they’ve filed their taxes a break, AP/Times said, by permitting them to file a form with the feds saying they’ve done so. That’ll get them another subsidy in 2016.

“We want to make sure they don’t have a gap in affordable coverage,” Lori Lodes, communications director for HealthCare.gov, told AP/Times.

“But,” noted the news service, “the backstop only works if the customer actually filed. If they did not, the system will catch up to them eventually. Those who lie about having filed a tax return would violate perjury laws.”

Instant Insights /

40 percent of subsidized households could lose benefit

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